Gold Price Rally Sparks Shift in Indian Consumer Jewelry Buying Patterns
As gold prices continue their dramatic ascent, Indian consumers are rapidly adapting their purchasing strategies to navigate the financial strain. With geopolitical tensions fueling a glittering rally in the precious metal, buyers are increasingly turning to exchange programs—swapping old gold for new items—and accelerating their acquisitions of wedding jewelry to preempt even steeper rates in the near future.
Exchange-Led Sales Surge as Prices Climb
Arun Narayan, CEO of the jewellery division at Titan Company, highlighted a significant uptick in exchange-driven transactions. "Right now, people are concerned about rates spiraling even more, although there has been some cooling off in the last few days. We have witnessed a substantial jump in exchange-led sales," Narayan stated. He assumed the CEO role in January after a lengthy tenure within the company.
For Tanishq, Titan's flagship jewelry brand, exchanges now constitute close to half of all sales, reflecting a profound shift in consumer behavior. This trend underscores the growing preference for leveraging existing gold holdings to offset the burden of escalating costs.
Price Volatility and Consumer Adaptation
Gold prices have exhibited remarkable volatility, reaching approximately Rs 1.8 lakh per 10 grams on January 29 before settling near Rs 1.5 lakh in the spot market as of Friday. This surge has placed considerable pressure on salaried and middle-class consumers, prompting a reevaluation of traditional buying habits.
In response, demand has pivoted toward lightweight jewelry pieces, as heavier items become increasingly unaffordable. Within the gold segment, there is a noticeable shift toward 18-karat options, which offer a balance of purity and cost-effectiveness. A parallel movement is emerging in the diamond market, where 9-carat and 14-carat diamonds are gaining traction due to their relative affordability.
Resilient Demand Amid Inflationary Pressures
Despite the inflationary impact on gold prices, demand remains robust, driven by deep-rooted cultural perceptions of gold as a reliable store of value. "The confidence in gold has only grown with the rates going up," Narayan remarked, projecting a positive outlook for the ongoing wedding season. He emphasized that gold's intrinsic value continues to bolster consumer sentiment, even in the face of economic headwinds.
For investment-oriented purchases, gold coins have experienced the highest recent growth, indicating a strategic diversification among buyers seeking to capitalize on gold's appreciating value.
Titan's Strategic Foray into Lab-Grown Diamonds
In a strategic move to expand diamond adoption, Titan has entered the lab-grown diamonds market with its new brand, beYon. After long avoiding this segment, the company has positioned its inaugural store in Mumbai directly opposite a Tanishq outlet, a tactical decision aimed at fostering consumer engagement.
Narayan explained that the initiative seeks to enhance the penetration of diamonds, which currently stand at a mere 10%-12% in the Indian market. "The idea is to nudge consumers into diamond buying through lab-grown diamonds, eventually encouraging them to upgrade to natural diamonds," he said.
Lab-grown diamonds, priced significantly lower than their natural counterparts, are designed to lower the entry barrier and increase purchase frequency. "beYon has the role to increase adoption and frequency. The pricing is the sweetest at beYon, and we expect to nurture that customer over time toward Mia, CaratLane, or Tanishq," Narayan added.
According to a report by research firm Redseer, lab-grown diamonds are projected to account for about 16% of the global diamond market by 2029, up from nearly 12% in 2024, highlighting the segment's growing significance and potential for market disruption.
